Employment Law Considerations for STEM Employers: Navigating Apprenticeships in the STEM Sector
Skills shortages are impacting every industry, none more severely than in the digital and STEM sectors where businesses have faced difficulties recruiting for data-skilled roles.
Investing in ‘homegrown’ talent is becoming a sustainable strategy to address the immediate economic impact of the pandemic and the long-term effects this left behind. Developing a strong pipeline of future talent is crucial, especially with the onset of an ageing workforce.
Apprenticeship training offers a solution to digital skills gaps, allowing businesses to cultivate future specialists from the ground up. Tech companies, in particular, can enhance their workforces through software engineering and software development apprenticeships, ensuring the long-term success of their operations.
However, understanding the legal landscape surrounding apprenticeships is crucial for Employers. The core purpose of an apprenticeship contact is for the apprentice to learn and for the employer to teach. It is a form of paid employment whereby the apprentice gains hands-on work experience combined with training which may lead to a formal qualification.
There is a common misconception that apprentices can be treated in exactly the same way as other employees, particularly when it comes to termination of employment. That is rarely the case. Employers should exercise caution before taking any steps to terminate this type of contract before the natural expiry of the fixed term as a failure to do so could result in claims being brought against them and substantial damages being awarded by a Court of Employment Tribunal.
What is an apprenticeship in Scotland?
In Scotland, while apprentices are employees, an apprenticeship contract is not a “normal” contract of employment. It has a special character, providing apprentices with “day one” enhanced rights protecting them against early termination.
Apprentices are commonly employed for a fixed term (typically between one and four years or until a qualification is reached), usually work around 35 hours a week and are entitled to a minimum hourly wage rate. The primary focus of the contract is training rather than the work performed by the apprentice.
In Scotland, apprenticeships are often associated with the Scottish Government scheme managed by Skills Development Scotland. There are three main types of “Modern Apprenticeship”:
- Foundation Apprenticeships: aimed at school pupils.
- Modern Apprenticeships: for individuals aged 16 and over.
- Graduate Apprenticeships: also for those aged 16 and over.
Does a contract of apprenticeship require to be in writing?
No, there is no legal requirement for a contract of apprenticeship to be in writing but it is advisable for it to be so. In any event, given apprentices are employees under the Employment Rights Act 1996, a Section 1 written statement of particulars of employment is required to be in place from the first day of employment.
Can a contract of apprenticeship be lawfully terminated?
Yes, a contract of apprenticeship can be lawfully terminated, but there are extremely limited grounds on which this can be done prior to the natural expiry of the fixed term.
For example, dismissal during the probationary period will only be justified if the apprentice’s behaviour or performance is so poor that they are deemed “untrainable” which is a very high threshold to meet. Apprentices cannot be dismissed for redundancy unless there is a business closure or a fundamental change in the business’s character, which again is a higher threshold than in a normal redundancy situation where headcount can be reduced if there is a downturn in trade.
Early termination of apprenticeship may occur by frustration (where something makes it practically impossible for the contract to be performed) or by mutual consent, (often with the comfort of a settlement agreement being implemented to protect the employer from potential claims arising).
Employers must remember that the expiry of a contract of apprenticeship by virtue of its fixed term amounts to a dismissal in law. To avoid unfair dismissal claims, employers should:
- Show a potentially fair reason for dismissal.
- Follow a fair procedure.
- Ensure the decision to dismiss is fair in all circumstances.
Employers should also adhere to the ACAS Code of Practice on Disciplinary and Grievance Procedures and comply with all aspects of discrimination law.
Is an apprentice entitled to enhanced damages for early termination?
Potentially yes. If a contract of apprenticeship is terminated early, the apprentice may be able to claim compensation for breach of contract. No qualifying period of service is required for this type of claim. Damages can be substantial and may include:
- Wages for the remainder of the contract of apprenticeship.
- Damages for loss of training and status.
- Damages for reduced future employment prospects.
An apprentice may also be able to raise an automatic unfair dismissal claim and/ or unfair dismissal claim depending on their length of service and the reason for their dismissal.
Is the legal position the same for apprenticeships in England & Wales?
No. The legal position in England & Wales is fundamentally different and employers are able to terminate the apprenticeship arrangement in a much wider range of circumstances provided the apprenticeship contract meets certain conditions set out in legislation.
Final thoughts…
Apprenticeships play a vital role in the STEM sector by introducing and training new talent as well as helping to close the skills gap. However, it is essential for employers to be aware of the employment law implications of employing apprentices in Scotland to ensure compliance with legal obligations so that safe, positive and productive training/ work environments can be fostered.
Please get in touch with our specialist STEM Employment Law Team if you would like to discuss any aspect of this blog or would like assistance with drafting/reviewing a contract of apprenticeship for your business.
This update contains general information only and should not be construed as providing legal or other professional advice.
Kimberley Tochel, Trainee Solicitor: kto@bto.co.uk / 0141 221 8012 / Connect with Kimberley on LinkedIn
